Things you need to know
Declare at this question discounts on employee share scheme interests (ESS interests) that you or your associate receive under an employee share scheme. ESS interests are:
- shares
- stapled securities (where at least one of the stapled interests is a share in a company)
- rights to acquire shares and stapled securities.
Treat an ESS interest your associate acquires in respect of your employment as though you acquire the ESS interest The discount is the difference between the market value of the ESS interests and the amount paid to acquire them.
The ESS interests can:
- be from an Australian company or a foreign company
- relate to your employment inside or outside Australia
- relate to a work relationship other than employment – for example, sub-contracting.
Schemes where you pay tax on the discount in the year you acquire the interest are known as 'taxed-upfront schemes'. However, if you and the scheme meet certain conditions the taxing point is deferred until a later time, this is known as the 'deferred taxing point'. These tax-deferred schemes are known as 'deferral schemes'.
Changes to ESS interests you acquire on or after 1 July 2015 include:
- changes to the timing of the deferred taxing point
- a tax concession through which some discounts on ESS interests in start-up companies won't pay tax under the ESS regime, if you meet the eligibility criteria. Subsequent gains on the disposal of these ESS interests you pay tax on under the capital gains tax rules.
Discounts on eligible ESS interests a start-up company provides you won't show on your Employee share scheme statement and you don't include them at this question.
Ceasing employment with the employer you acquire the ESS interests from isn't a deferred taxing point. If you cease employment, the deferred taxing point will become the earliest of the remaining deferred taxing points. This applies to ESS interests under deferral schemes, regardless of when you acquire them.
For more information, see Key ESS changes in detail.
Complete this question if any of the following applies to you:
- You receive a discount on ESS interests acquired under a 'taxed-upfront scheme'.
- A 'deferred taxing point' occurred in respect of your ESS interests under a 'deferral scheme'.
If you don't have any employee share scheme interests, go to Income in your supplementary tax return 2025.
The conditions of the scheme in which you participate, and your personal circumstances determine when you pay tax on the discount you receive.
You may be entitled to reduce the amount of the discounts you receive under taxed-upfront schemes by up to $1,000. You may qualify for the reduction if the total of following amounts is $180,000 or less, your:
- taxable income for the year (calculated as though you aren't entitled to the $1,000 reduction), excluding any assessable first home super saver released amount
- total reportable fringe benefits amounts (question IT1 – labels N and W)
- reportable employer superannuation contributions (question IT2 – label T)
- net financial investment loss (question IT5 – label X)
- net rental property loss (question IT6 – label Y)
- deductible personal superannuation contributions (question D12 – label H).
The rules of the scheme or a letter from your employer should advise you whether you have acquired ESS interests under a taxed-upfront or deferral scheme.
Associates
If an associate has acquired an ESS interest as a result of your employment:
- you must include the discount in your assessable income
- your associate doesn't include the discount in their tax return.
Temporary residents
If you qualify as a temporary resident for tax purposes, special rules may apply to the ESS interests you acquire.
For more information, see ESS – Foreign income exemption for Australian residents and temporary residents.
Disposal of ESS interests
Special provisions may apply if both of the following apply:
- you dispose of your ESS interests because of a corporate restructure or takeover
- you receive replacement shares, stapled securities, or rights.
For more information, see ESS – Rollover relief.
What you need to answer this question
You'll need your Employee share scheme statement from each employer with whom you participated in an ESS. You may have a paper or electronic statement. Each statement shows the amount of your discount and whether your discount was from a:
- taxed-upfront scheme eligible for reduction
- taxed-upfront scheme not eligible for reduction
- deferral scheme.
Statements may also show 'tax file number (TFN) amounts withheld' where applicable. TFN amounts withheld are amounts of tax withheld when you don't provide your TFN or ABN to your employer.
If you don't have all your Employee share scheme statements or similar statements, contact your employer. For more information, see Income statements or Lost or missing payment summary.
If you receive ESS interests from a foreign employer, you might not receive an Employee share scheme statement. A foreign employer can provide you the relevant details in writing.
Don't attach your Employee share scheme statements to your tax return. Make sure you keep your statements for at least 5 years after you're assessed on your discounts.
Completing your tax return
To complete this question, follow the steps.
For the purposes of steps 1 to 3, the term Employee share scheme statement includes similar statements and statutory declarations.
You can use our ESS calculator to help you answer this question.
Step 1
Add up all the discount amounts you receive from taxed-upfront schemes eligible for reduction, including:
- amounts showing on your Employee share scheme statements
- any foreign source discounts you receive.
Write the total amount at question 12 – label D.
Step 2
Add up all the discount amounts you receive from taxed-upfront schemes not eligible for reduction, including:
- amounts on your Employee share scheme statements
- any foreign sourced discounts you receive.
Write the total amount at question 12 – label E.
Step 3
Add up all the discount amounts you receive from deferral schemes where a deferred taxing point occurs during 2024–25, including:
- amounts on your Employee share scheme statements
- any foreign source discounts you receive.
Write the total amount at question 12 – label F.
Step 4
If you didn't write an amount at label D, add up the amounts that you wrote at label E and label F.
Write the total at question 12 – label B, then go to step 6.
If you wrote an amount at label D, continue to step 5.
Step 5
If you wrote an amount at label D, you may be entitled to reduce the amount of the discounts you receive under taxed-upfront schemes by up to $1,000. You may qualify for the reduction if the total of following amounts is $180,000 or less.
Calculate your taxable income (as if you're not entitled to this reduction) and excluding any assessable first home super saver released amount. If you had a taxable loss, treat it as zero for the purposes of this calculation.
Add the following amounts from the relevant labels to your taxable income:
- your total reportable fringe benefits amounts (question IT1 – label N and W)
- your reportable employer superannuation contributions (question IT2 – label T)
- your net financial investment loss (question IT5 – label X)
- your net rental property loss (question IT6 – label Y)
- your deductible personal superannuation contributions (question D12 – label H).
If the amount that you calculate was more than $180,000, you're not entitled to a reduction. Add up the amounts that you wrote at labels D, E, and F.
Write the total at question 12 – label B.
If the amount that you calculate was $180,000 or less, you're eligible for the reduction of up to $1,000. If the amount at label D is:
- $1,000 or less, add up the amounts that you wrote at labels E and F and write the total at question 12 – label B.
- More than $1,000, add up the amounts at labels D, E, and F then subtract $1,000 from the total and write the amount at question 12 – label B.
Step 6
Add up all the TFN amounts withheld from discounts from your Employee share scheme statements. Write the total TFN amounts withheld from discounts at label C.
Step 7
If you didn't pay foreign income tax in respect of any discounts you receive on ESS interests you have finished this question.
If you pay foreign income tax in respect of the discounts, you may be entitled to claim a foreign income tax offset for the discounts.
Write at question 12 – label A the total amount of your discounts from ESS interests for which you're claiming a foreign income tax offset.
To claim a foreign income tax offset, you must complete question 20 – label O in your supplementary tax return. For information on how to calculate a foreign income tax offset, read Guide to foreign income tax offset rules 2025.
If you pay foreign tax in respect of discounts on ESS interests you include in your assessable income in a prior income year, you may be entitled to a foreign income tax offset for that income year. To claim this tax offset, you need to request an amendment to your tax return for that income year.
Where to go next
- Go to Income in your supplementary tax return 2025.
- Return to main menu Individual tax return instructions 2025.
- Go back to question 11 Dividends 2025.